1.0Background of the Study
The new millennium brought with it new possibilities in term of information access and availability, simultaneously, introducing new challenges in projecting sensitive information from some eyes, whiles making it available to others. Today’s business environment is extremely dynamic and experience rapid changes as a result of technological improvement, increased awareness and demands Banks to serve their customers electronically. Bank have traditionally been in the forefront of harnessing technology to improve their products and services. The Banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate.
Information and communication Technology (ICT) is at the centre of this global change curve of Electronic Banking system in Nigeria today (Stevens 2002). Assert that they have over the times been using electronic and telecommunications networks for delivering a side range of value added products and services, managers in Banking industry in Nigeria cannot ignore information system because they play a critical impact in current Banking system, they point out that the entire cash flow of most fortune Bank are linked to information system.
The application of information and communication technology concepts, techniques, policies and implementation strategies to Banking services has become a subject of fundamental importance and concerns to all Banks and indeed a prerequisite for local and global competitiveness Banking. The Advertisement in Technology has played on important role in improving service delivery standards in the Banking industry. In its simplest form. Automated Teller Machine (ATM) and deposit machines now allow consumer carry out banking transactions beyond banking hours.
With online with banking individual can check their account balances and make payments without having to go to the bank hall. This is gradually creating a cashless society where ADOPTION OF NEW NOMENCIATURE
Following the impressive performance of the subsidiaries, a management retreat was held in February, 2009 where it was agreed that unity Bank and its compendium of subsidiaries be adopt an intergrated Group Structure. Therefore, unity Bank Plc and its subsidiaries will adopt a new nomenclature
that includes “Group”. This is now ‘UNITY BANK GROUP’. The members of this Group include
(1) Unity Capital Trust Limited
(2) Caranda Management Services LTD
(3) Consumers no longer have to pay for all their purchase with hand cash. For example:1 Bank customer can pay for airline tickers and subscribe to initial public offerings by transferring the money directly from their accounts, or pay for various goods and services by electronics transfer of credit to the sellers Account. As most people introduced mobile banking to cater for customers who are always on the move.
Mobile banking allows individual to check their account balances and make fund transfers using their mobile phones. This was populated by first Atlantic Bank(now First Inland Bank) through its “flash me cash” product customers can also recharge their mobile phones Via Sms. E- Banking has made banking transaction easier around the world and it is fast gaining acceptance in Nigeria. The delivery channels today in Nigeria electronic Banking are quite numerous as it is mentioned Automatic Teller Machine (ATM), point of sales (POS), Telephone Banking Smart cards internet Banking etc personal computers in the Banking industry was first introduced into Nigeria by Society General Bank as the popular PC easy access to the internet and world wide web (WWW) and internet is increasingly used by Bank’s as a channel of delivering the products and services to the numerous customers. Virtually almost all Banks in Nigeria have a web presence: this form of Banking is referred to as internet Banking which is generally part of Electronic Banking. The delivery of products by bank on public domain is an indication of advertisement which is known as E- Commerce. Electronic commerce on the other hand is a general term for any type of business or commercial transaction, it involve the transfer of information across the internet. E- Commerce involve individuals and business organization exchanging business information and instructions our electronic media using computers, telephones and other communication equipments. This covers a range of different types of business from consumers to retails products.
However Electronic banking as it is a product of E- Commerce in the field of banking and financial services. It’s offers different online services like balance enquiry, request for cheque.
1.1 Book Recording Stop Payment Instructions Balance Transfer Instructions, Account Opening and other form of traditional banking services. The internet allows businesses to use information more efficiency by allowing customers, suppliers, employers and partners to get access to the business information they need when they need it.
These internet enabled services all translate to scale and increased efficiency. E- Banking greatest promise is timelier, more valuable information accessible to more people at reduced cost of information access with the changes in business operations as a result of the internet era, security concern move from computer labs to the front page of newspaper. The promise of E- Banking is offset by the security challenges associated with the disintermediation of data access. One security challenge results from “cutting out the middlemen” that too often cuts out the information security the middleman provides. Another is the expansion of the user community from small group of known vetted users accessing data from the intact to thousands of users accessing data from the internet. Application service providers (ASP) and exchanges offer especially stringent – and sometimes contradictory – requirements of per user and per customer security while allowing secure data sharing among communications of interest. E- Banking depends on providing customers partners and employees with access to information in a way that is controlled and secure. Technology must provide security to meet the challenges encountered by E- Banking. Virtually all software and hardware ventures claim to build secure products but what assurance does an E- Banking have of a products security? E- Banking want a clear answer to the conflicting security claims they hear from vendors. How can you be confident about the security built into a product independent security evaluations against internationally established security criteria provide assurance of vendors security claims.
Customer expectation in term of service delivery and other key factors have
increased dramatically in recent years, as a result of the promise and delivery of the internet. Even after athe “dot-comcrash” these raised expectations linger
The growth in the application and acceptance of internet – driven is more achievable than ever before, however it is also more complex and fraught with potential costs and risk. The internet introduces customers to a new perception of business time as always “on available 24/7 and demanding an urgent and rapid response”
The challenges for managers is to reconcile their business and their own personal perceptions of time with perceived reality of internet time. The internet has decisively shifted the balance of power to the customer.
The internet is revolutionizing sales techniques and perceptions of leading brands and the internet is intensifying competition in all its forms.
Banking are continuing to use the internet to add values for their customers but in order for this to work effectively maximizing opportunities reducing risks and overcoming problems an E- Banking strategy is required as an impact.
The growth of the web and internet as new channels the growth in their use by customers and the flows of companies entering the market presents a series of key challenges to companies. It is easy and cheap to put up a website. But to create an environment delivering effective service on the web to a significant proportion of your customers base requires an E-Banking strategy.
Electronics banking offers different online service like balance enquiry, request for cheque books, recording stop payment instructions, balance transfer instructions, account opening and other form of transitional banking services. 1.2Statement of the Problem
In Nigeria, Customers of banks today are no longer worried about safety of their funds and increased returns on their investments but rather demand
efficient fast and convenient service.
Customers want a bank that will offers them services that will meet their particular needs (persionalized banking) and support their business goods for instance ; businessmen want to travel carryout cash for security reason they want to be able to check their balance online find out if a cheque is cleard transfer funds among accounts and even want to download transaction record into their own computer at work or home. Customers want a preferential treatment and full attention by their choice bank. All those are only achievable through electronic banking
In line with rendering qualities and acceptable services that most bank in Nigeria are gearing toward and investing large sum of money in information and communication technology. Expectedly such banks services have been improved. United Bank for Africa (UBA), Zenith Bank, ( to mention view) are in the forefront in the use of IT in rendering services to their customers the Guardian News paper April 18, 200 & 21). It also 12 seeks the challenges involved in electronics banking and best industrial practices and the approach of implementing them in Nigeria system.
1.3Objective of the study
The main objectives of the research work is to examine the impact of electronic banking in Nigeria banking system channels as well as different that could enhance the delivery of consumers and retails products, and also how bank choose to support their electronic banking component services internally, such as internet services provider internet banking software, core banking vendor, managed security services provider, bill payment provider, credit business and credit scoring company
Specifically the study objective are;-
1 To evaluate the prospects electronic Banking in Unity bank plc 2 To evaluate the impact of electronic banking in Unity Bank plc 3 To examine the effect of electronic banking has it improve the fortune of the bank. 1.4Statement of Research Questions
Since the release by CBN, August 2003 and the subsequent policy on the
guideline of electronic banking system in Nigeria One of the question that is currently being addressed is the impact of electronic banking on the traditional banking player, there are two view that are prevalent in the market. The controversies that the internet is a revolution that will sweap away the orders, argument in are as follow Electronic banking transaction are much cheaper than the branch transactions. Banks are easy to set up with lots of new entrants. Deposits will go elsewhere because these banks will have to fight to regain their customer base There would be increase in their cost of funds making businesses less viable. Portal providers are likely to attract the most significant share of banking profits. Traditional banks will find it difficult to evolve; they will be unable to obtain additional capital from stock market. E- banking as an evolution than a revolution. 1.5Research Hypothesis
The following hypothesis are formulated in null form to guide study; 1 HO; Electronic banking does not have prospect in Unity bank plc HI; Electronic banking has prospect in Unity bank plc
2 HU; Electronic banking has not impact on Unity Banks plc 3 HO2; Electronic baking has impact on Unity bank plc
H3; Adoption of electronic banking enhance the fortune of Unity banks pls.
4. H4; Electronic banking does not improve bank customer’s relationship 5.Ho; the bank electronic banking guidelines does not comply with the CBN electronic banking guidelines.
HU; the Bank electronic banking guidelines complies with the CBN electronic bank guidelines. 1.6Significant of the Study
The study would enable the bank executives and indeed the policy makers of the bank and financial institution to be aware of electronic banking as a product of electronic banking with a view to making strategic decision. The research is equally significant because it would provide answer to electronic banking in Unity bank Plc. 1.7 Scope of the Study
In pursuance of the objective of the study, attention shall be focused on electronic banking among other electronic commerce empirical investigation into the adoption of electronic banking in Nigeria and will also examine the nature of electronic banking operation in Unity Bank Plc from 2007 to 2009,.
1.8Limitation of the Study
In view of the technicalities involved. It would be unrealistic to assume that all necessary facts have been gathered in the process of the study information gathered is limited to those accesses and made available by the respondents and those gathered from end users However the impacts of this limitation will be reduced to the barest minimum. 1.9Definition of Related Team
1.Access product – product that5 allow consumers to traditional payment instrument electronically, generally from remote locations. 2.ATM card – UB debit card is a chip device consisting of circuit element on single silicon chip
The card a complex circuits that process micro processor with a single chip that contains the complete arithmetic aid logic unity of computers. 3.Chip card A card knows as an integrated circuit (IC) card. A card containing one more computer chip or special purpose processing used to validate personal identification. 4. Smart card – A card with a computer chip embedded on which financial health education and security information can be stored and processed. 5.Western Union Money Transfer (WUMT) is a product that allowed people with relatives in Diaspora who may be remitting money home for family up keep, project financing school fess etc Nigeria communities known for having their siblings gainfully employed in other parts of the world are idle market for Western Union Money Transfer.
2.1 HISTORICAL BACKGROUND OF CASE STUDY
Brief Profile of Unity Bank Plc
Unity Bank Plc is one of the leading retail in Nigeria which emerged from the lagest merger and consolidation of Nine Banks intercity Bank, First interstate, Tropical Commercial pacific Centre point, NNB Bank of the North and New Africa Bank Limited and spearheaded in investment banking corporate and retail banking came together in January 2006 to from Unity Bank Plc. It
has 284 business officers spread across the country and working to increase this number in the nearest future. Unity Bank is the sixth largest Bank in Nigeria today by business locations. The Head Office is located at plot 785, Herbert MacaulayWay, Central Business District, Abuja While the Head Office Annex is at No. 290, Akin Olugbade Street, Victoria Island, Lagos. The Mission of the Bank is to create superior wealth for our stakeholders and The Vision is to be one of the top Five financial service institutions in Nigeria by 2013. Vision Drive Strategic Objectives
* Attain a set minimum balance sheet size with respect to Asset size and profitable by the year 2013. This is referred to as 5-in-5 taking it from 2008 to 2013. * Achieve Industry Top 5 position in rate of return on Equity * Achieve Industry Top 5 ration of income to cost
* Build a superior customer service environment within Unity Bank (c) Technology
* Significantly improve Technology leverage within the Bank (d) Human Capital
* Build a winning human capacity and Spirit.
(e) Retail Focus
* Build the nation’s number 1 retail Bank.
2.1.2INTRODUCTION TO ELECTRONIC BANKING SYSTEM
Electronic banking system is a conventional banking system which stated in Nigeria in 1952; (Benjamin 2001). Since then the industry has witnessed a lot of regulatory and institutional advances. The industry was being controlled by at most five out the 89 banks in existence before the commencement of the merger and acquisition of banks in Nigeria economy. Multiple branch systems is also one of the notable features of Nigerian Banks, with a total of 89 banks accounting for about 3017 bank branched nationwide as at 2004. As well the industry was faced with heavy challenges including the overbearing impact of fraud and corruption. Erosion in public confidence a poor capital base persistent cases of distress and failure poor
asset quality and so on. Part of the move to resolve these lingering problems including the banking reform initiated by the Central Bank of Nigeria in June 2004, which is largely targeted at reducing the number of Banks in the economy and making the emerging banks stronger and reliable. So far the banking reform has been a success story with 25 mega banks emerging after the recapitalization exercise which ended on 31st December, 2005 in the bid to catch up with global development and improve the quality of their service delivery. Nigeria banks have no doubt invested much o technology and have widely adopted electronic and telecommunication network for delivery a wide range of value added product and service, they have in the last few years transformation from manual to automated system. Unlike before when ledger cards were used, today banking has been connected to information technology networks thereby facilitating the practice of inter – banking and inter – Branch banking transactions. Development domestically has the introduction of mobile telephone in 2001 and improved access to personal computer and internet service facilities have also added to the growth of electronic banking in the Nigerian banking sector, However where as local banks most commonly practice real time on line internet banking, the integration of customers into the process is far from been realized. Many of the reason are attributed to the high prevalence of internet fraud and lack of an adequate regulatory framework to protect the banks from the volatility of risk associated with internet banking especially at the levels of communication and transactions. In the main Nigeria is globally regarded as the headquarters of Advance Fee Fraud which is perpetrate mostly via the internet (Journal of international affairs Vol. 51, 209 – 301.
2.2 THE VIEW ON ELECTRONIC BANKING
The vast majority of the recent literature on electronic money and banking suffers from a narrow focus. It generally ignores electronic banking entirely and equates electronic money with the substitution of currency through electronic gadget Such as smart cards and virtual currency. For example Freedman (2000) proposes the electronic banking and electronic money consist of three device; access devices stored value cards and network money. Electronic banking is simply the use of new access device and is therefore ignored. Electronic money then is the sum of stored value (smart)
cards and network money (value stored on computer hard disks). What is most fascinating and 23 revealing about this apparently popular view is that electronic banking and electronic money are no longer functions or processes but devices
Within this rather narrow scope for electronic money there are nonetheless many research that address one or more of the challenges facing it Santomero and seater (1996) print (1991) and sliy and Tarkka (2002) and many others present models that identify conditions under which alternative electronic payment substitute for currency to emerge and flourish on a large scale depending on the characteristics of the various technologies as well as the characteristics of the potential user
Berentsen (1998) considers the impact that the substitution of smart cards for currency will have o monetary policy arriving that although electronic substitutes for currency substitution will leave the demand for Central Bank reserves largely intact Good haft (2000) discuss how monetary control would in an economy in which Central Bank currency has been partially or completely replaced by electronic substitutes.
Conan (2001) distinguishes between monetary control and monetary anatomy where monetary control is the ability of the of the Central Bank to influence output and price, Cohen that the introduction of electronic currency substitutes will not reduce monetary autonomy other hand; Kobrin (1997) arques that electronic currency substitutes are 24 part of a general process of technological advance and globalization that are rendering national authorities of all kinds important and obsolete.
Lee and long – Akindemowo (1999) present the standard justification for regulation of financial markets systemic risk and consumer protection; they argued that both will justify regulation of electronic currency substitutes they noted that European regulators have already defined stored value cards as the taking of a deposit so that only banks may issue them, several other authors particularly Central Banks such as freedman (2000) have argued that the state can always use its power to regulate electronic money providers if
they prove to be determined to monetary policy or finance stability. Helleiner (1998) makes the case that such coercive power will still be effective in a world of electronic banking. Tanaka (1996) on the other hand, proposes the establishment of a monetary authority in cyberspace that will control electronic currency substitutes.
Friedman (1991) point out that electronic banking presents the possibility that an entire alternative payment system not under the control of the Central Bank of Nigeria may arise, in an extreme variant of freedman King (1991) argues that today computers make it at least possible to bypass the payment system altogether instead using direct bilateral clearing and settlement; the responses to Friedman. Woodford (2000) argue that the central bank will either continue to provide the payment system of choice or will find alternative ways to conduct monetary policy through stabilization of short term interest rates regardless of what form of money is being used.
Although this second set of research introduces some critical issue, it is too vague about what exactly is meant by electronic money and banking. Part of the vagueness stems from the focus of these papers on the payment system rather than on the payment media. Nonetheless a complete view of electronic money and banking should include both the payment system and the media used in the system. The feasibility of an alternative payment after all is intimately tied to the feasibility and desirability of the media flowing through that system.
2.3ELECTRONIC BANKING AND THE COMMON BANKING PRODUCTS
The use of information technology in banking operations is called electronic banking Ovia (2001) argue that electronic banking is a product of e – commerce I the field of banking and financial service. i what can be described as business – to – consumer (B2C) domain for balance enquiry request for cheque books, recording stop payment instructions, balance transfer instruction, accounts opening and other forms of traditional banking service, Banks are also offering payment services on behalf of the customer who shop in different e- shop.
2.3.1TELEPHONES AND PC BANKING PRODUCTS
This is a facility that enables customer, via telephones calls, find out about their position with their bankers merely dialing the telephone numbers given to them by the banks in addition the computer on the phone would require special codes given to the customer as a means of identification of authentic users before they can receive any information they requested for. This is a service introduces into the banking balance as a result of computer telephone technology being made available Ovia(2001) the technology baking has a universe of possible application limited only by the imagination, these areas include: Account balance enquiry: Account statement printing intra – Banks Account to Account Transfer: inter – Banks Account to Account Transfer: Download Account Transaction etc Telephone and Pc banking brings the bank to the doorstep of the customer, it does not require the customers to have his premises: interaction voice response becomes a regular feature of operations: Text – to – speech capability becomes reality: A uniformed messaging capability become permanent feature of the bank.
2.3.2THE CARD SYSTEM
The card system is a unique electronic payment type. The smart card are plastic devices with embedded integrated circuit being used for settlement of financial obligations. The power of card lies in their sophistication and acceptability to store and manipulate data, and handless multiple application on one card security (Amedu 2005) Depending on the sophistication, it card and ATMs ( Automatic Teller Machine) While the electronic card is gaining popularity in USA and Nigeria, the Spanish financial institution demonstrated the highest implementation and update of smart card accords Europe (Amedu 2005) The smart cards was introduce into the Nigeria market to reduce or eliminate problems of carrying cash about (Amedu, 2005) it is electronically In addition it also contains security programs these protect transactions between one card user and the other, it between one card user and the other, it can also be transferred directly to a retailer, merchant or other outlet to pay for goods and services and like cash, transaction between individuals without the need for banks of the other third parties, Also the system does not require central clearing. It
is valued immediately. Also the system allows transfer of one value to the other hence it operates like cash.
2.3.3THE AUTOMATED TELLER MACHINE (ATM)
Worldwide the use of paper cash still remains the most widely used and acceptable means of setting financial transaction in increasingly on the decline especially in advance economics (Amedu 2005). In USA where the use of cash is still prominent compared with European countries it represents 50 percent or more of the total transactions. Of course, cash is a non – electronic payment method. However the physical carriage of cash as well as the visit to the bank branches is being reduced by the introduction of an electronic device ATM.
An ATM device allows a bank customer to withdraw cash from his account via a cash dispenser (Machine) and the account is debited immediately. A fundamental advantage is that it needs not to be located within the banking premises. It is usually in stores, shopping malls, fuel Satiations etc
A cheque is a paper based payment instrument whose usage are still gaining ascendancy the Automation focus on this instrument is to reduce the number of clearing days and improve on security arrangement in the course of settlement and collection. For examples in Nigeria the Central Bank of Nigeria CBN has just embarked upon online clearing and Nigeria has signified interest and signed path to this project (Johnson 2005)
2.4THE ENTRY OF NIGERIAN BANKS INTO ELECTRONIC BAKING.
Electronic banking both as a medium of delivery of banking service and as a strategic tool for business development has gained wide acceptance internationally and more banks entering the fray. Nigeria can be said to be the threshold of a major banking revolution with net banking having already been unveiled (Ovia 2001) of all the sectors in the Nigeria economy, Banking stands out despite “a not too good” economy Electronic banking provide the facility of accessing customer account from anywhere in the world by using home computer with internet connection, is particularly fascinating worth
individuals having multiple bank account the growth potential is therefore, immense. Further incentives provide by banks would dissuade customers from visiting physical braches, and thus get hooked to the convenience of armchair banking at present the situation does not seem to have shown any significant improvement where as about 90 percent of the banks in the country offer other forms of electronic banking service like telephone banking ATM and electronic fund transfer, internet banking is yet to take center stage. This aspect of baking is still at the basic informative stage (Ovia, 2001) this is so despite the widely acclaimed benefits of internet banking against the traditional branched banking practice part of the reason indentified for the inability of banks in Nigeria to take full advantage of this mode of banking includes lack of adequate operations infrastructure like telecommunications and power upon which electronic banking generally relies, Development process, internet banking can be said to have less I the existing banking structure in the country Earlier articulate reason why internet Banking was having a moderate economic impact in the country including that Nigerian Banks customers are not on the average trained on for teller jobs and the working of internet banking a situation which makes transaction processing via internet banking prone to error; the absence of a clearly defined frame – work for internet banking, leaving banks with inadequate legal cover to provide the service and poor telecommunication infrastructure all over the country. In addition the fact that internet assuage in the country has been abused by cyber – criminals makes its window unattractive for domestic banking operations and legitimate international operations. The inherent banking service in Nigeria is against re – enforced by the growing evidence that the world over, dubook Nigerians use fake website to scoop fund from unsuspecting victims. In some cases, these crimes are committed using existing banks sites.
2.5.1THREAT OF CYBER – CRIMES ON THE NIGERIAN BANKING SITES.
The Advantage fee fraud or 419, which is one of the popular of all interest frauds Has of its origin from Nigeria in the 1980s it development and spread follows the path of the development in technology at inception, postal letter were used as key media for committing 419 frauds. Later in the early 1990s it became integrated into telecommunication facility such as the
telephone and fax from the late 1990s following the introduction of computers and internet 419 crimes became prevalently perpetrated through the use of e-mail and other internet means (Amedu 2005) the latest dimension taken by the perpetration of this crime is the use of fake internet bank site and using that to encourage victims to open account with them. The country is the third high est ranked in internet money offer fraud As was reported in one of the national newspaper frauds and forgeries in Nigeria bank as at June 2005 Stood at 329 or N1.15 billion monetary equivalent against 222 cases or N1.47 billion monetary equivalent in April same year, There is even global suspicion that a Nigerian crime Syndicate that Coordinate global crimes such as money laundering bank fraud and 419 searms exist today. These issues basically defeat he key ingredients of electronic banking which include confidentially integrity and availability.
Several factors are responsible for the above situation. They include inordinate tolerance for corruption among Nigeria public and government agencies; weakness of the existing legislative judicial institution to makes and enforce relevant laws on cyber crimes quality of graduates I terms of professional value and ethics chronic unemployment among graduates and the widening gap between the few rich and the many poor caused mainly by bad government. In the main, erosion of good value principles and corruption constitute the greatest cause of using cyber-crimes among Nigeria (Domestic electronic payment in Nigeria) (Amedu, 2005) this according to transparency international is worsened by fact that sever generation of Nigerians have been raised in this norm, Hence what is seen as a dangerous global crime is socially acclaimed and glamorized in Nigeria. The above situation constitutes the environment upon which electronic banking has emerged in Nigeria although the level of the adoption and practice of electronic baking (especially internet banking) has remained quite insignificant global projections still remains that information technology would continue to pay a revolutionary role in the development and delivery of banking products and services all over the world. In effect it is this projection that has raised pertinent regulatory questions concerning electronic banking like Nigeria. One key issue here borders on how to handle the rising level of frauds and forgery prevalent I the entire banking system and how to make
internet banking system and how to make internet banking fit well in the banking structure of a country so notoriously identifiable with criminals use internet access.
2.5.2THE REGULATORY CHALLENGES
At the national level the Nigeria government and the relevant regulatory agencies have strived to match the rapidly changing electronic banking environment with necessary regulations and frame works (Soludo, 2005) earlier effort made to this effect including the enactment of the failed Bnaks (Recovery of Debts) and malpractices in Bank Decree NO. 18 of 1994 and the money laundry of 1995. However as noted above poor enforcement procedure rendered these instrument very inactive in checking the menace of financial crimes. By the late 1990s following record growth internet and computer usage in the regulations girding the banking industry including the banks and other institution Act of 1991 were lacking adequate provisions to accommodate the emerging trend. Not even a mention of electronic banking or any manner of its application was mentioned in any of these prevailing regulation documents the situation created a lot of gaps between the levels 32 of CBN regulatory tools and the same time made the bank venerable to all kind of risk (Soludo 2005) This deficiency notwithstanding, it is not until 2003 when the maiden guidelines on electronic banking guidelines emerged from the finding of a Technical committee on electronic banking set up by the Central Bank of Nigeria in 2003 to find appropriate modalities for the operation of the committee that electronic banking in August 2003 of the key provision of the guidelines only a section deals with issues of the guidelines only a section deals with issues relating to internet Banking section paragraph 4 of the guidelines exception any stresses that banks should put in place procedures for maintain the banks web site including the various security features needed for internet banking service (CBN 2003) Despite its numerous technical specifications he guidelines have been widely criticized as not being enough to check the growing popularity of electronic banking against the back drop of growing sophistication in technology related crimes and frauds. Closer examination of the content of the guidelines equally shows that the document fails to meet up with the four keys areas where electronic banking may have regulatory impact – changing
the traditional lines upon which existing regulatory structure are laid handing concerns about existing public policy issues changing the natural and scope of existing risks and rebalancing regulatory rules and industry discretion Again some important recommendation of the Technical committee that gave rise to the adoption of the guidelines was paragraph 6.1 of the committee reports which among others recommended that all banks intending to offer transaction service o the internet other e-banking product should obtain an approval in – principle from CBN prior to commencing these service.
Part of the criticism is that the recent guidelines are capable of constraining the practice and development of Electronic Banking Nigeria. One of such for instance is the requirement on electronic banking product development while acknowledgement that the existing regulations would apply wholly on emphasized that only banks section 4.2 of the guidelines emphasized that only banks which are licensed supervised and with physical presence in Nigeria are permitted to offer electronic banking service in Nigeria and that virtual banks are not to be allowed the guidelines also gives indication that the products services can only be offered to residents of Nigeria with a verifiable address with the geography boundary of Nigeria any person resident permit or other legal residency designation under the Nigeria immigrations any person know were in as a classified person who neither is temporarily in Nigeria. The guidelines go further to indicate that the e-banking service should be offered in Naira only and that where such a service is to be provided in foreign currency it should be to only the holders of ordinary domiciliary account and conform with all foreign exchange regulation on some other aspects, the guidelines have been criticized by unity bank executive and customers for not addressing adequately the critical issues concerning internet security it failed to explicitly recommend a standard that allows banks to examine in each individual financial institutions current network. In addition to this array of criticisms the workability of proper internet framework is also queried amidst the poor state of basic information technological infrastructure in the country. This is essentially necessary since electronic Banking generally relies on the existence of adequate operational infrastructure like telecommunication and power to function effective through little
success has been recorded the supply of these requisite facilities is very erratic in the Nigeria case. Were they exist high cost of acquisition and maintenance tend to deny a greater percentage of the population access to them the case of internet access is a glaring one where majority of the citizen rely solely on the services of commercial cyber cafes to the E- Banking Guidelines to provide procedures not only for banks investment in internet facilities but also in promoting customers access to such. Unfortunate none of such is contained in the document.
Prior to the merger, each of the four banks maintained a unique brand discernable areas of coverage an easily identified degree of strength and competencies in various areas of the banking service and a fair share of the market.
Technology is undoubtedly a very important tool of every banks competitive strategy. It had drawn the line between success and failure. The deployment of Banks, web enable new generation enterprise banking solution has enable UNITY BANK to offer its customers banking service at their door step. The bank runs on a completely centralized system with BANKS (Version 6.2) as the main Banking Application the Banks innovation technology driven product are product are central and they have pioneers in the area of e-banking in Nigeria.
2.5.3ELECTRONIC BANKING PROFITABILITY AND EFFICIENCY
Commercial banks assaulted by the pressure of globalization competition from non-banking news ways to add value to the service the question what drives performance? Is at the top in understanding superior performance and hence striving for it substantial research effort have gone into addressing this questions starting from the strategic level and going down to operational details. A key study bench marking the strategies of leading retail banks and (vander Velde 1992) This study is based on the opinions of head of retails banks at all us commercial banks established the linkage between marking operations organizing excellence this finding lead to the formulation of the service management strategy encapsulated in the trail operational capabilities service quality performance capability service
quality performance (-SQ-P) (foth and Iackson 1995) the C-SQ-P trail is in turn a focused view of the service profit chain described by (heskettet all 1994) based on their analysis of successful service organizations.
2.5.4BANK CUSTOMER RELATIONSHIP
Bank customer relationship is just a special contract were a person entries valuable items with another person with an intention that such items shall be retrieved on demand from the keeper by the person who is entrusted with above mentioned valuable items shall be retrieved on demand from the keeper by the person who so entrust thus the banker is the one who is entrusted with above mentioned valuable items while the person who entrust the items a view to retrieving it on demand is called the proxy. The banker too is under obligation to pay so long the proxy is dully authorized by the customers. The relationship is also fiducially. The terms and condition governing the relationship should not be leaked to a third party particularly by the bankers, Also items kept should not be released to a third party without due authorization by the customer.
2.6OPERATIONAL OF FINANCIAL INSTITUTION
Financial institution provide service as intermediaries of the capital and debt markets, they are responsible for transferring funds from investor to companies in need of those funds financial institutions facilitate the flow of money through the economy to do so, saving are pooled to mitigate develop revenue. Should the yield curve become inverse film in this arena will offer additional fee generating services including securities underwriting and prime procreate.
This chapter describes the techniques and procedure used by the research in conditioning the study and accumulating the data for the population of the
study througth sampling techniques Sample size source of data method collection and method of data analysis and testing hypothesis
3.2POPULATION OF STUDY
The population to be used in this study covers all the 40credit officers of Unity Banks plc The population selected was designed to obtain adequate and diverse views pertaining to the level and impact of electronic banking in Unity bank.
The technique is used to ensure that all the segment of the population is included in the study
The sampling size to be used by the researchers in this study constitute (40) Unity Bank Officers
3.5SOURCES OF DATA
The researcher uses both the primary and secondary data in the study. The primary data are collected by the researcher through the use of questionnaire while the secondary data are data collected from CBN electronic banking guideline annual report of Unity Banks Plc and CBN annual report e.t.c
3.6METHOD OF DATA ANALYSIS
The study used both descriptive and inferential statistics in analyzing the data Also Simple frequency counts in percentage and the chi-square were used in the data analysis.
3.6.1TEST OF HYPOTHESES AND INFERENCE
The Chi-square test was employed by the researcher to test the significance of the responses from the credit officers of Unity Bank plc (respondent) The Chi Square test is performed by defining the numbers of case fully in each category. The formula for the Chi- Square is:
O: = Number of observed case in category
E: = Number of expected cases in category
K: = Number of category Summation Runs from 1 =1 to 1 – k
3.6.2DECISION RULE AND NOTIFICATION
A set of decision rule is the verbal equivalent of a graphical decisions tree, which specifies class membership based on a hierarchical sequence of (Contingent) decisions. Each rule in a the form of a Horn clause where in class membership is implied by a conjunction of contingent observations.
DATA ANALYSIS AND DISCUSSION FINDINGS
4.1A total of 40 questionnaires were distributed to the various credit officers of the unity bank plc in Lagos state after the questionnaires were filled by the respondents and collected back they were screened a sorted out by the researcher the detail of of the returned questionnaires shows that out of 40 sent out,only 35 were completed. Hence 87.5% of the respondent returned their questionnaires. 4.2PRESENTATION AND ANALYSIS OF DATA
4.2.1QUALIFICATION OF RESPONDENT
The researcher was able to meet with the respondent to know their level of qualification, the able below shows their different qualification and their response.
Table 4.1 ; Qualification of Respondent s
ALTERNATIVE RESPONDENT PERCENTAGE
OND 5 14 3
HND 9 25 7
BSC 14 40
M.SC / MBA 7 20
TOTAL 35 100
Sources; field survey, 2013 40
Table 4.1 shows the number of respondents by qualifications. The data collected indicated that 14 or 40% of respondents are B.sc Holder, 9 or 25.7% are HND holders, while 7 or 20% are master holders and non among have PHD. Therefore it could be inferred that majority of the credit are B.sc Holders 4.2.2WORKING EXPERIENCE
The research was able to meet with different respondent to know their years experience with unity bank plc.
Table 4.2 years of Experience with unity bank plc.
ALTERNATIVE RESPONDENT PERCENTAGE
1-5 years 8 22.9
6-10 years 10 28.6
11-15 years 9 25.7
16-20 years 6 17.1
21 years and above 2 57
TOTAL 35 100
Sources ; field survey 2013
Table 4.2 shows how long the respondents have been working with bank form the data collected it could be seen that 12 or 40% of respondents have spent between 1-5 years working with the bank, while 16-20 years and 2 or 25.7% between 11-15 years 6 or 17.1% between 16-20 years and 2 or 5.7% for more than 21 years. In view of this fact it could be deducted from the analyzed data in table 2 that 77.1% of the respondent have spent appreciable period of 5 years and above working in the bank.
4.2.3CADRE OF RESPODENTS
ALTERNATIVE RESPONDENT PERCENTAGE
Junior credit officer 14-40
Senior credit officer 21-60
Sources; field survey, 2013
Table 4.3 shows that 21 or 61% of respondent are senior credit officers with the bank while 14 or 40% are junior credit officers. Therefore the bank senior credit officers are more than the junior ones
The respondents were asked about their professional qualifications and their responses were presented below
Table 4.4 professional Qualification
ALTERNATIVE RESPONDENT PERCENTAGE
Associated chartered Accountant (ACA) 16 45.7
Chartered Institute of Bankers of Nigeria (CIBN) 15 42.9
Certified Auditor 2 5.7
Certified information System 2 5.7
Total 35 100
Sources; field survey, 2013 42
Table 4.4 shows that 16 or 45.7% respondent are members of Chartered Accountant on 7% Nigeria, 15 or 42.9% of the respondent are professional bankers and 2 both 2 or 5.57% are for certified auditor and certified information system respectively. Therefore most workers in the bank are professional and such one would expect quality services and information from them
4.2.4DEPARTMENT OF RESPONDENTS
The respondent were asked of their department are from different department and their responses were presented below. Table 4.5 Department of Respondent
ALTERNATIVE RESPONDENTS PERCENTAGE
Human Resource 3 8 6
Cleaning and Cash Management 13 37.1
Business Development 25.7
Information Technology 12.9
Credit and Making 16 45.7
Total 35 100
Source: Field Survey, 2010
Table 4.5 indicate that 3 or 8.6 of the respondents are the human resources department 13 or 37% Clearing and cash management 2 or 5.7 to business development while 1 or 2.7% of the respondents are information. Technology department and 16 or 45.7% of the remaining are in credit and marketing Therefore, it could be deduced from the data analyzed above that credit and marketing department has the higher number of staff as such the bank will always strive to gainthe larger share of market share.
4.2.6THREAT TO ELECTRONIC BANKS
The respondents were asked of the threat involves in electronic banking and their responses were presented below.
Table 4,6 Threat to Electronic Banking
ALTERNATIVE RESPONDENTS PERCENTAGE
Adequate Security 00
Legal threat 00
ATM Found 00
Poor communication link 00
All of the above 35 0
Total 35 100
Source: Field Survey, 2010
Table 4.6 show that all respondents i.e 35 or 100% of the respondents were of the agree opinion that the bank place more emphasis in all the electronic banking threat to determine its effectiveness. 4.2.7THREAT ASSESSMENT
The respondents were asked about their assessment of threat involved in electronic banking and their responses were presented below: Table 4.7 threat Assessment
ALTERNATIVE RESPONDENT PERCENTAGE
To a high extent 0 0
To a moderate extent 27 77.1
To a lower extent 6 17.1 44
No respond 25.7
Total 35 100
Source: Field Survey, 2010
On the assessment of the Unity Bank Electronic Banking System, 27 or 77.1% of the respondent were 6 or 17.1 low and 2 or 5.7% sow no respond and more respondent with opined of high. Therefore based in the Data collected, it shows that the bank has low incidence of threat in electronic Banking System.
4.2.8RESPONDENT ASSESSMENT OF UNITY BANKS ELECTRONIC BANKING SYSTEM The respondents were asked of the assessment of Unity Bank plc Electronic Unity Bank and their responses were presented below: Table 4.8 Unity Bank Electronic System
ALTERNATIVE RESPONDENT PERCENTAGE
Excellent 5 14.3
Very Good 27 77.1
Good 3 8.6
Total 35 100
Source: field Survey, 2010
Table 4.8 shows the assessment of electronic banking system of Unity Bank 27 or 77.15 of the respondents have the opinion that they are very good while 5 or 14.3% excellent and 3 or 8.6 considered it as a good and none of the respondent opined that it is either fair or poor. 4.2.9INFORMATION TECHNOLOGY TRAINING PROGRAM
the researcher was able to ascertain the level of information technology training program in Unity Bank plc and the responses are shown below:
table 4.9 IT program
ALTERNATIVE RESPONDENTS PERCENTAGE
Strongly agreed 5 14.3
Agreed 26 74.2
Undecided 3 8.6
Disagree 1 2.9
Strongly Disagree 00
Total 35 100
Source: Field Survey 2010
On the assessment of training development program for Unity Bank Offecers the table 9 show that 26 or 74.2% of the respondents were of the agree opinion, 5 or 14.3% strongly agree 3 or 8.6% undecided and 1 or 2.9% disagree and none respondent opened on strongly disagree therefore the bank have information training development programs respondent were of the agree opinion. 4.2.10LEVEL OF ELECTRONIC BANKING
The respondent were asked about the level of electronic banking and response is shown in table 4.10 Table 4.10 level of electronic banking
ALTERNATIVE RESPONDENT PERCENTAGE
Strongly agreed 11 31.4 46
Agreed 22 62.9
Strongly disagree 00
Total 35 100
Source: Field Survey 2010
Table 4.10 shows that 22 or 62.9% of respondent were of the agree opinion that electronic banking system has make banking transaction more easier, 11 or 31 45% strongly agree while 2 or 5.7% were undecided and none of the respondent is either of the disagree or strongly disagree opinion. From the data, it indicates that the banking transaction has been made easier with the introduction of electronic banking.
4.2.11IMPROVEMENT OF CUSTOMERS SATISFACTION
The respondent were asked about the level of satisfaction derived from electronic banking and their response is show in table 4.11 below: Table 4.11 customers satisfaction improvement
ALTERNATIVE RESPONDENTS PERCENTAGE
Strongly agreed 13 37.1
Agreed 21 60
Strongly disagree 00
Total 35 100
Source: Field survey, 2010 47
Table 4.11 shows that 21 or 60% of the respondent were of the agree opinion that electronic banking have improve customers satisfaction 13 or 37.1% strongly agree while 10 or 2.9% undecided and non respondent disagree, therefore, agree opinion having higher percentage shows that electronic banking has really shows that electronic banking has really improved customers satisfaction.
4.3TEST OF HYPOTHESIS
Electronic Banking does not have prospect of electronic bank in Unity Bank Nig, Plc Table 4.12 Chi- Square table on the prospect of electronic banking in Unity Bank Respondents view O; – Ei (O; – E;) Strongly agree 1578649.14
Agree 167981 11.57
Undecided 27-525 3.57
Disagree 17-636 5.14
Strongly disagree 17-636 5.14
Total 353550242 34.56
Source: Computer from Data 2010
(Chi-Square) Value Calculator is 34.56 the degree of freedom K-L, 5-1 = 4 from the Chi-Square rule Table x 22
4; 0.05 = 9.4877
Calculated = 34.5,6
Tabulated = 9.4877 48
Decision rule: Since x2
Calculated is greater than x2
Tabulated (34.56779.4877) at 5% confidence level and 4 degree of freedom the first nul hypothesis which sate that electronic Banking enhanced Unity Bank efficiency is accepted. 4.3.2HYPOTHESIS TWO
Electronic banking does not have impact on the overall performance of the bank Table 4.13 Chi-Square table o the overall performance of the Bank Respondent view O; Ei Oi-Ei (Oi-Ei) Strongly agree 13 7 6 365.14 Agree 167981 11.57
Undecided 27-5 25 3,57
Disagree 27-5 25 3.57
Strongly Disagree 17-6 36 5.14
Total 35 35 0 171 28.99
Source: Computer from Data 2010
(Chi-Square) value calculated is 28.99
The Degree of freedom K – 1,5- 1= 4
Using the statistical table to find the value of Z2
4; 0.05 the result is = 9.4877
Calculator = 28.99
Tabulation = 9.4877
Decision rule: Since x2
Calculated is greater than x2
Tabulation (28.9979.4877) at 5% confidence level and 4 degree of freedom the second null hypothesis is rejected and 49 the alternative hypothesis which start that Unity Bank Plc Electronic banking have impact on the overall performance of the banks is accepted.
Table 4.14 Chi Square table on the fortune of Unity Bank
Respondent view Oi Ei Oi – Ei ( Oi – Ei)
Strongly Agree 17 7 10 100 14.28
Agree 13 7 6 36 5.14
Undecided 37 – 4 162.28
Disagree 2 7 – 5 25 3.57
Strongly Disagree 07 -7 49 7
Total 35 35 0 226 32.24
Source: Computed from Data 2019
(Chi – Square) Value Calculated is 32 .27 the degree of freedom K-1, 5-1 = 4 Using the Statistical table to find the value of Z2
4; 0.05 the result is = 9.4877
Dose not comply with the CBN electronic Banking Guideline
Table 4.16 Chi – Square Table o the CBN Electronic Banking Guidelines Respondents view Oi Ei Oi – Ei ( Oi – Ei)
Strongly Agree 19 7 12 144 20.57
Agree 14 77 49 7
Undecided 07 – 7 49 5.14
Strongly: computed from Data 2010
(Chi – Square ) value calculated is 44.85 the degree of freedom k-1, 5-1 = 4 Using the statistical table to find the value Z2 4; 0.05 the result is = 9.4877 Therefore x2
Calculated = 44.85
Tabulation = 9.4877 52
Decision rule = since X2
Calculator is greater than X2
Tabulated (44.857 9.4877) at 5% confidence level and 4 degree of freedom the second null hypothesis is rejected and the alternative hypothesis which started that Unity Bank Electronic Banking Guidelines comply with CBN electronic banking Guideline is accepted. 4.3.5DISCUSSION OF FINDINGS
From the above analysis it is seen that in hypothesis one, you can see that respondents agreed that electronic banking does not have prospect in Unity Bank In hypothesis we can also see that respondent agreed that electronic banking does not enhance the fortune of Unity Bank Hypothesis four shows that respondents strongly agreed that the Unity Bank Electronic Banking does not improve its bank customer relationship hypothesis Five shows that respondents strongly agree that Unity Bank electronic comply with the CNB Electronic Banking Guideline.
SUMMARY, CONCLUSION AND RECOMMENDATION
The study was carried out in order to assess the impact of electronic banking system in Unity Bank. The general introduction aspect shade more light on the essential of electronic banking. Many literature and academic publication from different authors in publication from different authors in electronic banking product emerging issues in electronic. In the cause of this research the research was able to find out that origin of electronic banking system which started in Nigeria in 1952 Also the prospect of electronic banking was looked into critically electronic banking improve the fortune of Unity Banks this was achieved by adopting the CBN banking guidelines
Based I the summary of the major finding the following conclusions are draw: 1. The adoption of electronic banking has enhanced Unity Bank efficient by making it more productive and effectives 2. Electronic Banking also has a strong impact on the overall banking performance by making workers performance more effective and efficiency. 3. The adoption of electronic banking gas enhanced the fortune of the bank this is achieved through bank charges cheque withdrawal slip and withdrawal charges. 4. The electronic banking has improved the bank customer relationship by rendering effective service throughout the week customers can now have access to their account outside working hours to make withdrawal to attend to their needs. 5. The electronic banking guidelines introduces by CBN strongly helps in effective electronic banking system. Withdrawal can be made anywhere at any time and using any bank ATM machine customer cannot withdraw more than some certain amount to allowed other customers have access to the cash and money can be transfer from one place to another through electronic means. In general conclusion the electronic banking has made banking transaction to be easier by bringing service closer to the customers
In order to give the growing trends of information and communication
technology (ICT) which involves net banking and e-commerce in banks a vision in the right directions, the following strategies are recommended for further following up: 1. The banks must be focused in teams of their needs and using the right technology to achieve goals rather than accruing technology of internet banking because other banks have it 2. Government participation in ensuring focused telecommunication industry must be visible to reduce or remove avoidable costs of implementing e-commerce and internet banking 3. Regulatory authorities like CBN (Central Bank of Nigeria) must stipulate standard for the banks to follow to avoid making Nigeria Banking Sector a dumping ground for the outdated technological infrastructure.
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Bank for international settlements (2001) committee on payment and settlement system Survey of electronic money development prepared by the committee on payment and settlement system of the Central Banks of the Group of Ten Countries November.
Beerentsen, A. (1998) Monetary policy implication of Digital Money Kyklos Vol. SI. PP 89 117
Berry M.J.A; Linoff, G.S (1999) Mastering Data mining: the Art and science of customers relationship managing, New York: John Wily & Sons. PP. 57 61 Central Bank of Nigeria (2003) report of the technical Committee on electronic Banking , February
Cohen, Benjamin J. (2001) Electronic Money: New Day or False Dawn? Review of international polical Economy Vol. 8. PP 197-225 Connel F. and Salen M.N (2004) Six puzzles in electronic Money and Banking IMF working paper IMF institute. Vol. 19. February. Davenport T.H (1993) process innovation Reengineering work through information technology Boston: Harvard Business School press pp. 30 – 35. Financial standard Newspaper (2006) Vol 7 No. 28 April, pp3. Freedom C. (2000) monetary policy implementation: past, present, and Future will Electronic Money Lead to the Eventual Demise of Central
Banking? International Finance Vol. 3, No. pp. 211 – 27 Friedman B. (1999). The future of Monetary Policy: The Central Bank as an Army with Only a Signal Corps? International Financial, Vol. 2. No. 3 pp. 321 – 38. Goodhart Charles A.E (2000) can Central Bank Survive the IT Revolution? International Finance Vol. 3, No. 2 pp. 189 – 209 Hackathorn. R (2003) Factor for Implementing Active Data warehousing datawarehouse. Com. Halleiner. E (1998) Electronic Money: A Challenge to the Sovereign state? Journal of international Affairs, Vol. 51, 387 – 400. Heilinger. M. Bingerhut. S. (2002) Business Activity Monitoring EAI meets Data Warehousing EAI Journal. July, pp 18 – 21. King M. (1999) Challenges for monetary policy:New and Old Bank of England Quarterly Bulletin November pp 307 – 415 Koutsoyiannis A. (1991) Theory of Econometric Hampshire: Macmillan Limited. Lee B. and Longe – Akindemowo O. (1999) Regulatory issues in Electronic Money A Legel – Economics Analysis, Netnomics, Vol. 1, pp 53 – 70.
Department of Banking and finance,
Osun State Polytechnic Iree Osun – State, Nigeria
May 14, 2013
I am an HND student in the above name Department and institution presently conducting a research on “The Impact of Electronic Banking in Nigeria Banking System (Critical Appraisal of Unity Bank Plc)” in partial fulfillment of the requirement for the award of HND. The finding are Strictly to be used for academic purpose only. Thank you sparing your time to participate in the study
Please tick [ ] in the appropriate box provided to indicate your answers. 1. What is your academic qualification?
OND [ ] HND [ ] B.sc [ ] M.sc/MBA [ ] PHD [ ]
2. How long have your been in the service of Unity Bank Plc? 1-5 years [ ] 6-10 years [ ] 11-15 years [ ] 16-20 years [ ] 21 years above [ ] 3. Which category of cadre do you belong?
Junior Credit Officer [ ] Senior Credit Officer [ ]
4. Which of these department do you have?
ACA [ ] CIBN [ ] Certified Auditor [ ] Certified Information System [ ] 5. Which of these department do you belong to?
HR [ ] Clearing Cash Manager [ ] Business Development [ ] Information Technology Credit and Marketing [ ] 6. Which category of threat does Unity Bank places more impression? Adequate security [ ] Legal Threat [ ] ATM fraud risk poor [ ] 7. How can you assess the incidence threat of Unity Bank electronic bank system? High [ ] Low [ ] Moderate [ ]
8. How can you assess the overall performances of Unity Bank electronic Banking? System Excellent [ ] Very Good [ ] Fair [ ] Poor [ ] 9. Unity Bank Plc has training program on information technology for its staff.
10. Introduction of electronic banking has eased banking transaction
11. The introduction of electronic banking has improved customer satisfaction.
12. Electronic banking hence its effectiveness and efficiency Unity Bank.
13. Unity Bank Plc electronic banking have impact of its overall performance of the bank
14. Adoption of electronic banking would enhance the fortune of the bank.
15. Unity Bank electronic banking improves its bank customer’s relationship.
16. The bank electronic banking guidelines comply with CBN electronic banking guidelines.